Amid speculation over who the next Reserve Bank of India (RBI) governor would be, the government is learnt to have skirted the difficult option of choosing from among a clutch of eminent economists and revisited the idea of assigning the crucial job to a tested bureaucrat. And the choice, according to sources with knowledge of the matter, could be economic affairs secretary Shaktikanta Das.
The mantle could fall on the Tamil Nadu cadre IAS officer as he has rich experience in the finance ministry in different capacities and has, in a short span of time, come to be regarded as one who is in perfect sync with the policy priorities of the Narendra Modi government.
Das as RBI governor would also minimise the chances of any potential conflict between the government and RBI while some important structural changes in the ways of monetary policy and public debt management are managed are under way, the sources added.
Prime Minister Modi will take a call on the matter shortly and an announcement is expected later this week.
In recent decades, Yaga Venugopal Reddy and Duvvuri Subbarao, who respectively were the 21st and 22nd governors of the central bank, were roped in from the IAS fraternity.
Das, 59 and a 1980 batch IAS officer, is perceived among his peers as an “upright” and highly organised bureaucrat.
Among all the incumbent officers in the North Block, he has the widest experience in budget making and also dealt with the central bank on monetary policy issues, thanks to his various assignments in the ministry, first as joint secretary (budget), then as special secretary in the economic affairs department, revenue secretary, and in his current capacity as economic affairs secretary. He has been part of the seven central budgets during his tenure in the Centre from November, 2008 up to now.
Another factor that could work in Das’s favour is that he comes across as a typical bureaucrat without any political leanings. He also contributed significantly to resolve the differences between the RBI and the government after the latter proposed in FY16 budget to set up an independent public debt management agency (PDMA) to take over the government debt management functions from the central bank.
The revised Indian Financial Code, which suggested giving majority to government-appointed members in the monetary policy committee (MPC) had also led to some deliberations with the RBI, leading to an MPC framework with equal representation from RBI and government-appointed members in a six-member panel that will set interest rates. The governor has been given a casting (extra) vote to break a tie.
The RBI governor’s post will become vacant after September 4, when the incumbent Raghuram Rajan’s three-year term ends. Rajan has already said he won’t seek a second term.
Other contenders for RBI governorship include deputy governor Urjit Patel and former deputy governors Subir Gokarn and Rakesh Mohan and chief economic adviser Arvind Subramanian. Some recent reports also suggested that NITI Aayog vice-chairman Arvind Panagariya is also in the race, but this could not be independently confirmed.